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Jan 22: Politics of a Stock Market Bloodbath |
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Tuesday, 22 January 2008 |
So, the Dow Jones Industrial Average (DJIA) is down 3-4% with more losses expected soon. Judging by the devaluation of the dollar and DJIA highs, we'll be headed down to the 10,x00 range soon.
No doubt, some leftists will blame capitalism and the free market, and some conservatives will defend Bush by saying it ain't so bad. The thing is, it is Bush's fault and NOT the free market.
Let us review the bad government policy that brought us here:
-Artificially low interest rates: When the fed sets interest rates below market forces, it encourages reckless spending, discourages saving, and creates dollar devaluation.
-Keynesian deficit spending: Every time you hear the word "stimulus" be aware that the government is promoting a socialist method of creating inflation in order to devalue the dollar.
This was supposed to prevent the recession, but anyone who has been watching GDP growth in real dollar terms knows that the recession started a few years ago.
Rather than soften the blow, the government interference in
the economy is setting us up for even greater falls because its
discourages the actors in the market from cutting back consumption and
increasing savings, the natural result of a natural recession.
Now
over the weekend the global markets are crashing on a lack of faith in
the American economy. Will we sit and take our recession, and make the
necessary cut backs?
No. The Fed has announced a three-quarter point rate
cut (more inflation) and the government is proposing a bipartisan
(Keynesian) stimulus package that involves more than $140 billion in
deficit spending.
The only logical result of
this is more inflation and dollar devaluation - and unless people start
getting significant raises, there will be more foreclosures,
bankruptcies, and corporate defaults.
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Last Updated ( Wednesday, 09 April 2008 )
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